Example: Deduction due to international double taxation

In the 2023 income tax return of Mr. ABT, 30 years old, single and resident in Malaga, the following figures appear:

General tax base: 36,000
Taxable base for savings: 12,000

Within the general tax base, whose components are all positive, there are 6,000 euros obtained abroad, the taxpayer having paid in the country of obtaining it for a tax of a similar nature to IRPF the amount of 1,100 euros.

Similarly, the taxable savings base, all of which are positive, includes net capital gains amounting to 6,000 euros and a capital gain derived from the transfer of a capital asset amounting to 6,000 euros, for which the amount of 1,080 euros has been paid abroad for a tax similar to IRPF .

Determine the deduction for international double taxation applicable in the declaration of IRPF , fiscal year 2023, assuming that there is no international double taxation agreement between Spain and the country where the income is obtained and that the taxpayer is entitled to a reduction of the general tax base of 4,800 euros and general deductions from the quota in the amount of 1,500 euros.

Solution :

General tax base : 36,000

Reductions in the general tax base : 4.800

taxable base : 31,200

Taxable savings base and taxable savings base : 12,000

Application of tax scales to the general taxable base (31,200)

General tax scale

Up to 20,200 = 2,112.75

Other: 11,000 at 15% = 1,650

Resulting 1st rate: 3,762.75

Autonomous tax scale

Up to 21,100: 2.207

Other: 10,100 at 15% = 1,515

Resulting quota 2: (2.207 + 1.515) = 3.722
Application of the tax scales to the general taxable base corresponding to the personal and family minimum

Since the amount of the general taxable base (31,200) is higher than that of the personal and family minimum (5,550), it forms part of the general taxable base in its entirety.

Overall scale : 5,550 at 9.50% = 527.25

Resulting quota 3: 527.25

Autonomous scale 5,550 at 9.50% = 527.25

Resulting 4th rate: 527.25
Determination of the general, state and regional integral quota.

Full state general fee (Fee 1 - Fee 3): 3,762.75 - 527.25 = 3,235.50

Full regional general quota (Quota 2 - Quota 4): 3,722 - 527.25 = 3,194.75
Tax on the taxable savings base (12,000)

State lien

Up to 6,000 at 9.5% = 570

Remaining 6,000 x 10.5% = 630

Addition: 1,200

Autonomous tax

Up to 6,000 at 9.5% = 570

Remaining 6,000 x 10.5% = 630

Addition: 1,200
Determination of full quotas

Total total share (3,235.50 + 3,194.75) = 6,430.25

Total savings quota (1,200 + 1,200) = 2,400

Total gross share (6,430.25 + 2,400) = 8,830.25
Determination of the net share

Deductions: 1,500.00

Total net share (8,830.25 - 1,500) = 7,330.25
Deductions from the total liquid contribution

Deduction for international double taxation (the lesser of A or B)
1. Cash amount paid abroad
  
  By performance: 1,100
  
  For capital gain: 1,080
2. Result of applying the average effective tax rate, general and savings, to the portion of the taxable base, general and savings, taxed abroad .
  
  B.1. Average effective general tax rate
  
  The general tax rate is determined by the following operation: Total net share x (general net share / total net share) ÷ General taxable base
  
  [7,330.25 x (6,430.25 ÷ 8,830.25)] ÷ 31,200 x 100 = 17.10%
  
  B.2. Savings tax rate:
  
  The savings tax rate is determined by the following operation: Total net share x (total savings share / total net share) ÷ Taxable savings base
  
  [7,330.25 x (2,400 ÷ 8,830.25)] ÷ 12,000 x 100 = 16.60%
  
  B.3. Part of general taxable base taxed abroad
  
  The portion of the general taxable base taxed abroad is determined by applying the reduction that proportionally corresponds to the income obtained abroad and integrated into the taxable base. This operation can be represented by the following formula:
  
  General taxable base x income obtained abroad) ÷ Positive components of the general tax base
  
  (31,200 x 6,000) ÷ 36,000 = 5,200
  
  B.4. Part of the taxable savings base taxed abroad: 6,000
  
  Note: Since in this example all the components of the savings tax base are positive, the portion of the savings tax base taxed abroad coincides with the amount obtained abroad, as no reduction is applicable to the savings tax base, since the personal minimum is entirely part of the general tax base and no reduction has been applied to it.
  
  B.5. Tax borne in Spain
  - Part of the general taxable base (5,200 x 17.10%) = 889.20
  - Part of the taxable savings base (6,000 x 16.60%) = 996
Amount of the deduction for international double taxation (the lesser of A or B)

For returns (889.20) + For capital gains (996) = 1,885.20